Prime Minister Narendra Modi is set to sign a landmark free trade agreement (FTA) with the United Kingdom during his visit to London on July 24. This marks India’s first major bilateral trade deal with a developed country in over a decade. Accompanying the Prime Minister is Commerce and Industry Minister Piyush Goyal, who will also sign the agreement.
The two countries concluded negotiations for the FTA on May 6 after three years of discussions. The agreement aims to significantly strengthen economic ties by removing tariffs on a wide range of goods and services. It proposes to eliminate taxes on Indian exports of labour-intensive goods such as leather, footwear, and apparel, while lowering duties on imports of British products like whisky and cars. The goal is to double bilateral trade between the two nations to USD 120 billion by 2030.
After the deal is signed by the commerce ministers of both countries, it will be presented to the British Parliament for approval. The Indian Cabinet has already cleared the agreement. The United Kingdom is currently the sixth-largest investor in India, with investments amounting to approximately $36 billion. In the UK, there are almost 1,000 Indian businesses that employ about a million people and have invested a total of $2 billion.
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As part of the agreement, 99 per cent of Indian products will gain duty-free access to the UK market, covering nearly the entirety of India’s current export portfolio. A double contribution convention has also been signed by the two nations in a related development. Businesses can save a lot of money thanks to this provision, which exempts Indian employers from paying social security contributions for Indian employees in the UK.
The two countries' trade has been steadily increasing. India's imports increased by 2.3 per cent to $8.6 billion in 2024–2025, while its exports to the UK increased by 12.6 per cent to $14.5 billion. From $20.36 billion in 2022–2023 to $21.34 billion in 2023–2024, bilateral trade increased overall.
At President Mohamed Muizzu's invitation, Prime Minister Modi will visit the Maldives after his commitments in London. A potential reset in bilateral relations that had deteriorated under Muizzu's early leadership is indicated by the visit, which is regarded as a diplomatic breakthrough.
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